PG&E Corp (NYSE:PCG) is almost finalizing the terms of a $13.5 billion settlement with victims of wildfires caused by its power lines. This is a significant step toward settling the largest US utility bankruptcy, according to sources familiar with the issue.
PG&E to settle $13.5 billion compensation in cash and stock
PG&E will pay the victims half of the settlement in cash while the rest will be in stock in the latest reorganized utility. According to the people who asked not to be identified because this is a private matter, the cash portion could be settled in a lump sum with the rest of the settlement paid over 18 months. However, the parties are yet to reach a final agreement, and then there is a likelihood that the talks could still fall apart.
The California power giant indicated in a statement that it was committed to ensuring that all wildfire claims are settled in full as per the laws and as laid down in the bankruptcy plan. Last month the parent company for PG&E proposed compensation of $13.5 billion to the wildfire victims, sources familiar with the matter indicated so at the time. The parties have been at odds regarding the structure of the settlement and the amount that victims should receive in cash and what should come in the form of stock.
PG&E equipment caused catastrophic fires in 2017 and 2018
It seems now that the parties are making progress, and a deal could be possible, which would be a win for PG&E. The company has spent several months negotiating an appropriate restructuring plan to help it emerge from bankruptcy. Already the company has agreed to pay insurers and wildfire claim holders around $11 billion. Equally, it has a $1 billion deal to pay local government agencies.
At the beginning of this year, PG&E filed for Chapter 11 protections following claims that its equipment caused devastating wildfires in 2017 and 2018. This buried the company in liabilities worth around $30 billion. Compensating the wildfire victims has been the company’s largest impediment in its restructuring.